Posts tagged with: Ed Milliband

With the UK still struggling out of recession and with little good coming of the much heralded Copenhagen climate change summit, brighter news has presented itself in the recent report that the UK has over achieved on its carbon emission reduction targets.

Set by the Conservative government back in 1990, the original reduction target was to be 34% by 2020, however, recent findings suggest that this reduction will now be something nearer 36%, with a number of factors helping to reduce carbon emissions across the UK. The report, carried out by the Committee on Climate Change (CCC) and released in October is already sparking debate as to whether the government is doing enough to fight climate change through carbon reduction policies.

Government action

While the government has announced that it will not go ahead with the construction of any coal power stations employing carbon capture and storage, many believe that not enough is being done to bring about a wholesale change in the way Britain produces its energy.

However, despite surging ahead with non-renewable energy programs, it would be difficult to argue that ministers in Westminster have turned a blind eye to the potential of green energy. Indeed, the Department of Energy and Climate Change (DECC) has already overseen the devlopment of some of the largest off-shore wind farms in Europe.

The Clean Energy Cash Back Scheme (essentially a feed-in tariff) similarly represents a commitment to reduce carbon emissions through legislation. The DECC is already publishing papers on the future landscape of the UK power infrastructure with a grid capable of connecting various micro-generation sites across the country.

The recession factor

With the world financial crisis manifesting itself in the UK in the form of a protracted recession, this has of course had an effect on energy use with the population using less energy and therefore generating less carbon. Critics of the reports findings have highlighted that some of the carbon reduction percentiles can be accounted for by the economy and any imminent up-turn could similarly skew the figures.

In response to such assertions, Ed Milliband, minister for the DECC stated that,

“The recession will not deflect the Government’s efforts to cut emissions and move to a low carbon economy. We must redouble our efforts at home and internationally.”

The British government’s commitment to green energy despite the political rhetoric has traditionally been written off as cynical pandering to the green lobby. Certainly, even with the creation of the impressively titled Department of Energy and Climate Change (DECC) under the leadership of Ed Milliband which was sniffed at as a mere spin operation, few took the government’s will to tackle climate change seriously. When the Energy Act was passed through parliament in November 2008 the wheels were set in motion for the introduction of the much hyped ‘feed-in tariff’ or FIT as it is often been abbreviated.

Those within the industry were all well aware that similar tariff mechanisms elsewhere have provoked massive investment in solar sectors which previously hadn’t been on the green energy map. The ‘We Support Solar’ campaign was created as a mouth-piece for industry members and environmentalists alike to voice the message that solar power is the most viable means of generating clean, affordable energy in the future but that this viability hinged on the introduction of a comprehensive and generous tariff rate. This last part was the main concern for campaigners who worried that the government would introduce legislation which would neither attract investment, nor render the industry economically viable. Fortunately, with the DECC’s announcement of the Clean Energy Cash Back legislation (essentially a FIT) it now appears that the UK will have a bright, solar future.

A feed-in tariff is a mechanism whereby the government sets a law which guarantees a fixed, premium rate paid for electricity generated by renewable means. Traditionally, the benefits of solar electricity have been far outweighed by the cost of solar kits, installation and maintenance, something which has deterred investment and kept solar power as a low level, cottage industry in the UK. What the tariff does is off-set the obvious costs involved in the installation of solar plant by offering investors generous financial incentives for installing solar kit. The traditional energy companies in the UK will be obliged to purchase the solar energy at a price above market rates, the cost of this being spread over the consumers.

Even before the Clean Energy Cash Back announcement, the benefits to potential solar investors in the UK were being expounded. At the end of 2008 consultants, Ernst & Young reported that the UK had moved up to fifth place in a list of countries in an index entitled, Renewable Energy Country Attractiveness. Citing the impending introduction of the feed-in tariff and the relatively low value of Pound Sterling, the Ernst & Young report stated the UK’s rise in the index would continue as investors eventually cottoned-on to legislation changes designed to incentivise investors. It was therefore no surprise that heading the list was Germany whose own tariff legislation has often been held up as the example of how to create interest in unchartered territory for many investors.

Confidence in the future of the solar industry has certainly never been higher within the financial sector. The global financial crisis has highlighted the importance to many the need to diversify their investments and also seek viable alternatives to petro-chemical investment. In March 2009, the fund manager of Swisscanto, Pascal Schuler announced that oil and natural gas in particular would become unviable as investments within the next 20 years. Talking specifically about his green investment fund, Schular asserted that,

“Water, solar and wind energy are areas where we invest in the long-term, as there is an over-average growth potential when financing kicks off again. Banks will prefer them when they start lending.” Going on to add, “We will continue to invest in this segment but focus on companies which have a strong balance sheet and are able to survive this crisis”.

A brief look at Google will show that there is now a real buzz around similar investments in the UK solar industry. Websites such as solarinvestment.co.uk are highlighting the excitement which currently exists in the young British solar industry, the future of which looks brighter than ever. However, confidence in the solar industry is not limited to those simply within the industry. Consultants and analysts are all putting across the message that solar installations are the most effective ways to offer consistent, high yields in tumultuous times for global financial markets. One such exponent of the solar sector is investment guru, Jim Mellon who has added his weight to the solar revolution. Mellon, has demonstrated his belief in the prospects for a solar energy future by investing in mining company ‘Emerging Metals’ which focuses specifically on metals required for the manufacture of components used in photovoltaic technology. Listed in the Times Rich List with a net worth of £500m, the financier who predicted the financial crash stated,

“Solar is genuinely clean, it ticks all sorts of zeitgeist boxes. Within five years, solar power will be as cheap as oil and gas without the subsidy. It will be bigger than the internet in five years”

Of course, whether the solar industry will be bigger than the internet in the UK over the next half decade is open to debate. What is now becoming clear however is that the UK solar sector will have everything in place come 2010 to help the sector become competitive with industries in Spain, Germany, China, California and a number of other places.

In order to make the UK competitive with other PV behemoths around the world, British Prime Minister Gordon Brown has made it clear that he wants to establish a ‘Green New Deal’ making reference to the economic plan introduced by F.D. Roosevelt during the Depression to revitalise the US economy. In a statement, Brown said that moving the UK from a carbon to a green economy would not only help meet climate change targets, but also provide jobs in new industries which would be starting up. In a report released by Brown in March 2009, the figures stated that moving to a green economy would create up to 400,000 new jobs in the next eight years with an estimated 1.3 million people being involved in the UK solar sector by 2017. Gordon Brown, on a visit to Washington to meet Barack Obama declared,

“We know that the more we are able to co-ordinate these measures internationally, the more confidence and certainty we will build and the more investment we will be able to bring forward. That’s why I want to create a global ‘green new deal’ that will pave the way for a low-carbon recovery and to help us build tomorrow’s green economy today”.

With government backing, the UK is now in a strong position to build a solar sector which will be capable of emulating PV industries in Germany and Spain. In April 2010, the Clean Energy Cash Back (feed-in tariff system) will be introduced and the subsequent months will see a frenzy of activity both in the media and from investors as people attempt to join the industry in its infancy. 2010 will be a make or break year but it is now looking highly likely that as the economy goes out of recession and in to growth, the solar industry will reap the benefits of being both politically fashionable and financially attractive.

The We Support Solar group has launched a campaign for the government to add 10p to the proposed feed-in tariff, set to be implemented in the first quarter of 2010. The introduction of a UK feed-in tariff was set out by the government in July and has given the We Support Solar group some cause for concern regarding the long term effectiveness of making the UK solar industry competitive with those of Germany, Belgium and the Czech Republic. In a move set to highlight certain deficiencies in the proposed tariff legislation the We Support Solar website is currently urging people to petition MPs via their website with suggestions for the tariff before the consultation period finishes within the next few weeks.

The main concern among the solar industry lobby, most vociferously voiced by the members of We Support Solar, is that the rate paid by energy companies for electricity by means of solar energy will not be high enough to attract investment in the new UK sector. Indeed, the We Support Solar website has quoted that a failure to act on this particular piece of legislation would see the UK fail to catch up with its EU competitors on solar installation.

Citing the benefits of adding 10p to the proposed feed-in tariff the We Support Solar website claims the following advantages for the UK economy:

28,000 UK skilled solar power jobs by 2014

Over 400,000 new residential solar PV installations by 2014

Additional investment in UK solar PV manufacturing building on established centres in Wrexham, South Wales and County Durham

Certainly, with the announcement from Downing Street this year that Gordon Brown is planning to instigate a ‘green new deal’, using new renewable energies to revitalise the flagging economy, government action following the consultancy process will be under the microscope. The online campaign ultimately requests that MPs contact Ed Milliband, Secretary of the Department of Energy and Climate Change (DECC) to lay out these specific demands. Whether or not the government does act to introduce a truly workable tariff system will determine whether recent rhetoric represents a real desire to fight climate change or merely court the ‘green’ lobby at a difficult time for Brown’s premiership.

The UK government announced this week that it will roll out smart meters by 2020 and is currently going through a consultancy that will last until July. The introduction of the new high-tech metering system will bring an end to estimated energy bills and will make the growth of micro-generation much easier as it will allow monitoring of energy being consumed and fed-in to the grid.

For supporters of the proposed feed-in tariff, set to be introduced next year, this will also be an encouraging indication that the government is putting in place the infrastructure capable of dealing with the complexities of energy feed-in tariff monitoring. The Department of Energy and Climate Change declared the announcement as a ‘key-step’ in the move towards an intelligent grid system which will be of benefit to energy producers, micro-generators and consumers alike.

Micro-generation of energy across the UK will be kick started by the introduction of feed-in tariffs in 2010 as they will provide a fixed contract, guaranteeing a premium rate for small scale renewable producers feeding energy in to the national grid. The new smart meters and the technology involved will enable the monitoring of energy consumption and of course the energy fed in to the grid in order to make tariff payments accurate. Because of the increased potential for analysis of energy usage, smart meters will see the end of estimated bills and blanket tariffs which offer no rewards to consumers with energy conservation and climate change in mind.

Ed Milliband, Secretary of State for the Department of Energy and Climate Change announced,

“The meters most of us have in our homes were designed for a different age, before climate change. Now we need to get smarter with our energy. Smart meters will empower all consumers to monitor their own energy use and make reductions in energy consumption and carbon emissions as a result.

They will also mean the end of inaccurate bills and estimated meter readings. This is a big project affecting 26 million homes, and several million businesses, so it’s important we design a system that brings best value to everyone involved.”

The smart meter roll out, thought to be a step towards a fully integrated smart grid will be a huge tool in the introduction of the tariff system next year. The take up of renewable energy micro-generation in homes and business along with a cultural move towards carbon emission reduction will indeed herald smart meter technology as an important means for the government to meet its climate change targets in the next ten years.